You’re enjoying your retirement party, your last paycheque is about to be deposited, and soon you’ll be cracking into your retirement savings.

All smooth sailing? Well, it can be if retirees are aware — in advance — of some of the bumps in the road ahead. Save with SPP took a look at the most common risks faced by those of us who are retired.

If your retirement savings are invested and you plan to live off the proceeds, investment risk and inflation should be near the top of your list, reports the Financial Post.

“Turbulent markets, soaring inflation and a higher cost of living are all impacting older workers that are transitioning to full or part-time retirement,” Mercer Canada’s F. Hubert Tremblay tells the Post.

The Kiplinger website adds a few more. Will you outlive your savings, the article asks? That’s known as “portfolio failure risk,” and can happen even if you have a set withdrawal rate, such as taking out no more than four per cent of your savings each year.

“Another withdrawal method is guessing how long you’ll live and dividing your savings by 20 to 30 years—but what happens if you live 31 years,” the article asks.

They also cite “unexpected financial responsibility risk” as being a possible challenge — this would involve having to help out adult children or ageing parents — or both.

The Wealth of Geeks blog offers up a few more risks, including a surprising one — frustration.

“Retirees are frustrated with their retirement,” the article notes. “On average, retirees rate their satisfaction in retirement as 7.0 out of 10 in 2022, compared to 7.4 in 2020. Similarly, retirees ranked their alignment of life in retirement with their prior expectations at an average of 6.4 in 2022, down from 6.8 in 2020,” the article continues.

A lot of the frustration is linked to inflation — the fact that everything costs more than it did even a year ago, the article continues. Having less to spend than expected while on a fixed income becomes a source of frustration, the article explains.

Forbes magazine sees three chief risks for retirees. The first two, inflation and investment risk, we’ve covered — but the third is possibly even more important — longevity risk.

“While there are a lot of benefits to living a long time, longevity increases financial risk. You need to pay the living expenses for all those extra years. Also, your annual expenses might increase, because people generally need more medical and long-term care as they age,” the Forbes article explains.

Save with SPP has been embedded in the camp of retirement for more than eight years now, and we can add another risk to the list — carrying debt into retirement.

According to the Canadian Press, via CP24, Canadians have $1.83 in debt for every dollar they earn.

While that’s bad, having debt when retired (and living on less income) is worse. Trying to reduce debt prior to retirement is, in many people’s opinion, almost as important as retirement savings.

It’s a daunting list of potential pitfalls. The best way to arm yourself against future risks is to have retirement savings and thus, future retirement income.

If you have a pension or retirement system through work, you are ahead of the curve. If you don’t, consider the Saskatchewan Pension Plan. SPP is a pension plan any Canadian with registered retirement savings plan (RRSP) room can join. SPP will take your contributions, as well as transfers from other RRSPs, and will grow them efficiently in a pooled fund offering low investment costs. When it’s time to turn savings into retirement income, SPP has several options for you, including lifetime annuities which guarantee you’ll never run out of income. Check out SPP today!

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CPP benefit seen as modest in an environment where many lack workplace pensions

Writing in The Globe and Mail, David Lawrence provides a reality check for those of us thinking federal retirement benefits will cover our retirement costs.

He notes that the maximum benefit available from the Canada Pension Plan (CPP) for a new recipient in 2022 is $1,253.59 per month. But worse, not everyone gets the maximum — Lawrence writes that the average CPP payment this year is a mere $727.61 per month.

The traditional “three pillars” of Canadian retirement, he writes, are changing. While government pensions like CPP and Old Age Security (OAS) provide one pillar, and personal savings another, the third is pensions, which Lawrence says are not generally accessible to those who are self-employed or working on contract.

In fact, many people just don’t have a workplace pension, the article notes.

“While it used to be that clients were maybe worried that their pension wasn’t going to be enough, over the past 15 years we’ve encountered more clients who simply don’t have a pension [through their employer],” Tom Gilman, senior wealth advisor and senior portfolio manager with Gilman Deters Private Wealth at Harbourfront Wealth Management Inc. in Vancouver, tells the Globe.

Those who do have a pension are “more confident” about their retirement cost of living than those without, Gilman states in the article.

He also tells the Globe that your personal “income tax profile” should help you decide whether a registered retirement savings plan (RRSP) is a better retirement savings vehicle for you than the usual alternative, the Tax Free Savings Account (TFSA). Some people need the tax deductions associated with an RRSP more than others, the article explains.

Those who are going to live off their investments need to think about how best to structure their portfolio, states Laura Barclay of TD Wealth Private Investment Counsel in Markham, Ont., in the Globe article.

“For her, the holdings that best mimic a pension plan with stable, long-term payments are high-quality, blue-chip dividend-paying stocks,” the article notes.

Barclay tells the Globe she advises her clients to look for “high-quality companies… with growing earnings,” and that also pay dividends. Diversification is also important, she states in the article.

Harp Sandhu, financial advisor with the Sandhu Advisory Group at Raymond James Ltd. in Victoria, tells the Globe he takes a “tortoise” approach with his own retirement investments — “slow and steady wins the race,” the article notes.

If you are starting to save for retirement while older, don’t pick risky investments with high returns in the short term to try and catch up, Sandhu tells the Globe. Things can go wrong with such investment choices, he tells the newspaper.

If you ever have an opportunity to join a pension plan or retirement savings arrangement through work, be sure to join, and contribute as much as you can. When retirement savings is a deduction from your paycheque, you’ll quickly forget about it and will be happy, when you retire, that you’re getting more than just standard government retirement benefits.

If there isn’t any retirement program available for you, perhaps because you work on a casual or contract basis, the Saskatchewan Pension Plan may be of interest. Any Canadian with available RRSP room can join. If you have bits of pieces saved in multiple RRSPs, you are allowed to consolidate them within the SPP — you can transfer in up to $10,000 per year. Check out SPP today — it may be the retirement solution you’ve been searching for!

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Writer offers six tips on how to achieve financial independence

Financial independence, writes CTV’s Christopher Liew, “is when an individual has accumulated enough wealth or has a passive income stream capable of covering all of their living expenses for the rest of their natural life without needing a paycheque or salary.”

While the idea of never having to work for a living again sort of sounds like full retirement, Liew’s article suggests that this financial independence can be attained through “hard work, planning, and consistent action.”

First, he writes, you need to increase your savings rate.

“Your savings rate is the percentage of your total after-tax income that you save,” he explains. By doing a thorough audit of what you are actually spending your money on, you may be able to find areas where you can cut back, he continues. “By saving more money, you’ll be increasing your savings rate.”

Next, Liew recommends that we start investing early. “Investing your money is one of the most common ways to achieve financial independence,” he explains, adding that “the earlier you start, the better, due to the magic of compounding returns.”

Make sure, the article continues, that you are taking full advantage of your Tax Free Savings Account (TFSA). “TFSA accounts are best used as investment accounts, and none of the earnings within the account are taxable,” he notes. You should also “maximize the value” of your registered retirement savings plan (RRSP) and/or registered education savings plan (RESP).

Another tip is to look for other sources of income, to boost your overall earnings and free up more money for savings, the article notes. These “extra” streams of income can include dividends from investments, freelancing, rental income, starting a business, negotiating a raise, or finding a higher-paying job.

Another great bit of advice in Liew’s article is to “live below your means.”

“If you spend all the money you make, it will be difficult to achieve financial independence. Living below your means can be one way to spend less. For example, if you get a promotion at work and your salary increases, try to keep your spending at the same level instead of immediately increasing your living costs. The value of delayed gratification will mean reaching your financial independence goals earlier,” he writes.

Finally, you’ll have an easier time of achieving financial independence if you have a “like-minded spouse,” Liew writes. If both of you are on the same page, your drive towards financial independence will be doubled, he concludes.

These are all great tips. When we were working full time we did “live below your means” by simply paying the bills based on the prior year’s salary and earnings, and banking the difference. This indeed boosted our pre-retirement savings.

One of the nice features of the Saskatchewan Pension Plan is its flexibility on contributions. You decide how much you want to contribute (currently, up to $7,000 annually) and SPP contributions can be done through pre-authorized debits, can be paid like bills online, and can even be paid using credit cards (including, as we found out, pre-paid gift credit cards). Check out SPP today!

We’d like to extend our happy retirement wishes to Bonnie Meier, Director of Client Service, who steps down at the end of 2022. We all thank her for her many years of dedicated service to SPP, and wish her all the best in the life after work that awaits her!

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Could The Great Retirement be followed by the Great Returnship?

Will high inflation, volatile investment returns and soaring interest rates tempt new and recent retirees into “returnship,” or returning to the workplace?

That’s a view expressed in an article by Brian J. O’Connor, writing for SmartAsset via Yahoo! Finance.

“Retirees who find themselves hit by higher prices, lower stock returns and big health care bills might consider boosting their bank accounts by heading back to work – and employers are waiting to welcome older workers back with open arms,” he writes.

“Big health bills” are more of a U.S. problem than one we Canadians face, although long-term care costs can be eye-opening even here.

The article suggests having the option of returning to work could be a “linchpin” for your retirement plan. That’s because your work experience is more highly valued than ever thanks to the lack of new folks coming up the system to fill your job, the article continues.

“These employees are valuable because they are seasoned, and that’s not always easy to find today,” Charlotte Flores of BH Companies states in the article.

The article goes on to note that of the five million Americans who left the U.S. workforce during the pandemic, “more than two-thirds were over 55.” Now there are five job openings for every three U.S. workers.

“Employers are not only eager to hire experienced older workers, but they’re also open to bringing in retirees who’ve been out of the workforce for several years,” the article continues.

This rehiring of otherwise retired workers is called a “returnship,” the article explains. Large U.S. companies, such as Goldman Sachs, Accenture, Microsoft and Amazon have developed “returnship” programs.

“The programs are designed to give returning workers training, mentoring, a chance to learn or brush up on skills and lessons on how to navigate the current work culture. The trend is so strong that there even are “career-reentry” firms that specialize in connecting employers with returning workers, such as iRelaunch, which works with 70 companies offering returnships, including posting openings,” the article states.

Another benefit of going back to work after retirement, the article says, is that you can either “delay or reduce withdrawals from retirement accounts,” a decision that “stretches out your retirement nest egg to lessen your longevity risk.”

Here in Canada, that certainly would be true of any withdrawals from a Tax Free Savings Account or from a non-registered investment account. We have heard of defined benefit pension plans in Canada that permit you to stop receiving pension payments (temporarily) if you return to work – and let you resume contributions. We haven’t heard of there being ways to temporarily pause withdrawals from a registered retirement income fund (RRIF), however.

Many observers here in Canada have talked about making it possible to delay RRIF withdrawals, and continue to contribute to RRSPs, until later in life. Save with SPP spoke to Prof. Luc Godbout on this topic in the spring.

It sure seems like the old days of full retirement – our dad left work at 62 and never did a single lick of work again for the remaining 27 years of his life – may be gone forever. Not saying that’s a bad thing – a little work keeps your mind sharp and social contacts alive – but the concept of full retirement at 65 does not appear to be as likely in the 2020s as it was 30 or 40 years ago.

Whether or not you plan to fully retire in your 60s, 70s or later, you’ll need some retirement income. Most Canadians lack workplace pension plans and must save on their own for retirement. Fortunately, the Saskatchewan Pension Plan is available to any Canadian with RRSP room. This do-it-yourself pension plan invests the contributions you make, pools them and invests them at a low cost, and at retirement, turns them into an income stream. You can even get a lifetime annuity! Check out this wonderful retirement partner today!

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Years ago, when we were working away at Lakehead Living in Thunder Bay, Ont., a colleague asked us if we were contributing to a registered retirement savings plan (RRSP).

“What’s that?” we asked. And once it was explained that you would get a tax refund for contributions made to an RRSP, the 25-year-old us was in – starting off at $25 per month.

What’s the best retirement savings tip out there? Save with SPP decided to have a look.

Start saving today, advises the Merrill division of Bank of America. “Start saving as much as you can now and let compound interest — the ability of your assets to generate earnings, which are reinvested to generate their own earnings — have an opportunity to work in your favour,” the bank advises.

At the InvestedWallet blog there are two tips of note – to “fund your retirement account with side hustles,” and to “ditch the lavish vacations.”

Using “side hustles,” such as “flipping furniture, using a 3D printer to make money, or completing freelance gigs” is a great way to boost savings – direct your profits there, rather than to buying furniture or taking trips, the blog advises. And on big annual trips, Invested Wallet suggests cutting back on “destination” vacations (the average vacation in the U.S. costs $1,145 per year) and instead, doing something affordable during time off and putting the saved cash into retirement.

The Forbes Advisor offers up a couple of good tips – get rid of your debt now, and not after you are retired, and “practice retirement spending now.” The first one needs no further explanation – debt is harder to pay off when you are living on less.

The “practice” tip is intriguing. Basically, the article suggests that most retirees will live on 80 per cent of what they were earning before retiring. We had a friend who was fearful about living with her first mortgage. So her husband said look, let’s bank the difference between our rent and the mortgage in the run-up to buying the house, and live on the reduced income. This idea worked, her fears were abated and by now we’re sure that house is paid for.

At Sun Life, a variety of tips are included, with a sound bit of advice being “take full advantage of your employee pension plan.” A lot of times, the company pension plan may be optional. You don’t have to join. But if you don’t, you are missing out on putting away money for retirement, often with an employer match.

If you are in a defined benefit pension plan, be sure to find out if there are ways to purchase service for periods of time when you were off on a maternity or parental leave. Your future you will thank you later.

We’ll add a few others we have gleaned over the years.

Make your saving automatic – contribute something towards your retirement every payday, and up it when you get a raise. You will be paying yourself first.

A nice place to put your Canada Revenue Agency tax refund is back into your SPP or RRSP account. You’re making the refund tax-deductible.

Start small. We started with $25 a month nearly 40 years ago. Don’t think you have to start off big, or you may never start off at all!

If you haven’t started saving yet, a wonderful resource to be aware of is the Saskatchewan Pension Plan. It’s open to any Canadian with RRSP room. With SPP, you can contribute any amount you want, up to $7,000 per year, and can transfer up to $10,000 a year from other RRSPs. SPP will pool your contributions, invest them at a low cost, and grow them into a future source of retirement income. Check out SPP today!

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Canadians “retiring in droves,” with nurses and truckers leading the way

For decades, economists and pundits have predicted that a “grey tsunami” of boomer retirements would cause all kinds of collateral damage, such as increased healthcare costs and hikes in government spending on things like Old Age Security.

Well, according to Reuters, we may be about to find out if those decades-old predictions might come true.

The Reuters article calls it The Great Retirement.

“Canada’s labour force grew in August, but it fell the previous two months and remains smaller than before the summer as tens of thousands of people simply stopped working. Much of this can be chalked up to more Canadians than ever retiring,” the Reuters article reports, citing data from Statistics Canada.

And, the article continues, it’s not so much older Boomers who are hitting the silk on work, but “a record number of Canadians aged 55 to 64” who have retired in the last year.

“That is hastening a mass exodus of Canada’s most highly skilled workers, leaving businesses scrambling, helping push wages sharply higher and threatening to further drag down the country’s sagging productivity,” Reuters adds, citing the views of economists.

“We knew from a long time ago that this wave was coming, that we would get into this moment,” states Jimmy Jean, chief economist at Desjardins Group, in the Reuters article. “And it’s only going to intensify in the coming years.”

“The risk you have, and in some sectors you’re already seeing it, is that people are leaving without there being enough younger workers to take over. So there’s a loss of human capital and knowledge,” Jean tells Reuters.

Another slightly alarming stat revealed in the Reuters piece is that those of us who are still working are older, with one in five Canadian workers being age 55 or older. So there are many, many more workers who are entering the retirement zone.

So who specifically is retiring? Reuters says nurses and truckers are leading the way to the exits. An eye-popping 34,400 folks have retired from healthcare jobs since May, the article reports, and the Ontario Nurses’ Association’s Catherine Hoy says many of these retirements were unexpected.

The pressure on healthcare workers, particularly nurses, was intense during the pandemic – and the same is true for truckers, the article notes.

Older truckers – who, like nurses, were crucial workers during the early pandemic years – are leaving the profession, creating vacancies and a huge demand for new blood in the field. Many truckers are hired right after completing their training, the article notes.

“Without trucks and people to drive trucks … goods will sit at ports and in warehouses as opposed to getting to the destination where they can be consumed,” warns Tony Reeder of Trans-Canada College in the Reuters article.

This is a very revealing article. We have noticed that almost everywhere we go, help wanted signs are out. As well, you see certain places – local restaurants are an example – that have cut back their hours due to a lack of staff. It will be very interesting to see how this wave of Boomer retirements plays out – hopefully it will create the chance for better jobs for younger people.

You can’t, of course, contemplate retirement without having some sort of plan to finance your golden years. There are many ways to save, including workplace pension programs, but not every Canadian has access to a pension. If you are looking for a way to save on your own for your work-free future, take a look at the Saskatchewan Pension Plan. It’s available to any Canadian with registered retirement savings plan (RRSP) room.

With SPP, you can contribute any amount you want (up to $7,000 per year), and you can transfer up to $10,000 from other RRSPs into SPP. SPP’s role will be to grow your savings for you via low-cost, pooled investing. And once you’re ready to escape the work world, SPP has several options for your retirement income needs, including the chance of getting a lifetime monthly annuity payment. Check them out today!

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Focusing on what can go right in retirement

We’ve read, endlessly, about what can go wrong in retirement – running out of money, inflation eating away the value of your income, and so on – so today Save with SPP decided to focus instead on what can go right with retirement.

It’s not as easy to find good news on the subject, but an article from a few years ago from Sun Life looks in detail at retirement success.

The article cites a poll taken last decade as indicating that “having an active lifestyle” is most important to “Zoomers,” defined as those aged 45 plus.

“Today’s retirees aren’t spending their days in front of a TV. They’re walking, running, travelling, returning to school, volunteering and working part-time,” the article states.

The article looks in detail at the retirement life of Dennis Watson and his wife Sue Lamb. Dennis tells Sun Life that for him, retirement is “sleeping in, reading more, golfing more and travelling,” adding that “life’s good.”

What did he credit for his retirement success story? Planning. “People don’t plan to fail, they simply fail to plan,” he notes in the article.

Here are the key elements of his plan.

First, he started saving early. “Starting with my first part-time job, I saved about $1,000 a year, putting money every month from my pay into my tax-sheltered registered retirement savings plan (RRSP),” he tells Sun Life. He said that even putting a little money away each year will add up after four decades, the article continues.

Dennis also “borrowed money to max out my annual RRSP contribution” and “used my income tax refund to pay down my mortgage.”

As his savings grew, he began to invest his money in “quality stocks – banks, insurance, telecommunications companies,” and made sure his family was adequately covered by insurance, the article adds.

As he got near the end of his working life, he consulted a financial planner to set out his retirement plan, the article tells us. That gave both he and his wife Sue a full outline of the assets they have, the investments and the income they produce, their insurance company, and a look at all sources of retirement income, well in advance of the golden handshake, the article states.

“Retirement is the next stage in life. Embrace it, and enjoy it for all it’s worth. Life isn’t a dress rehearsal, so don’t go to the grave wishing you had done that one thing you always wanted to do. I worked hard for 40 years, so that I could enjoy the next 20 years — or more!” he tells Sun Life.

There’s a lot of positive information here. We like the twin ideas of systematic, regular retirement savings contributions and the idea of using tax refunds to plunk extra down on the mortgage (or other debt).

The takeaway is that if you start small, and later, begin to try and max out on your RRSP contributions, over time you will have a sufficient nest egg and can plan your exit from the work world.

Knowing what you’ll get from other sources, such as workplace or government pension plans, is also part of the puzzle.

People worry they won’t be able to get by on less money in retirement, but overlook the fact that they will almost always be spending less, and paying less taxes. Look at the net income you’ll get in retirement and compare it to the net income you are getting now – that’s a more realistic comparison.

If you don’t really know about investing (or don’t want to learn), a retirement savings option to consider is the Saskatchewan Pension Plan. With SPP, you decide how much to contribute – you can start small and work up to the maximum contribution of $7,000 per year. Mrs. Save with SPP borrowed money for her SPP – she put the money in a simple RRSP savings account to get the tax credit, and then transferred it to SPP the next year.

SPP will look after the tricky investing part, and will do so at a low cost, typically less than one per cent per year. At the time you turn in your ID badge, SPP will present options for your retirement income, including in-house lifetime annuities to choose from. Check out SPP today!

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We are frequently asked by former colleagues and friends still labouring in the workplace what retirement is like. It’s a somewhat difficult question to answer, but Save with SPP will give it a whirl in the hopes it helps others plan things out.

It seems impossible to imagine not working when you are, in fact, working. We think of vacation or long weekends as “time off,” but with all of those there is that last-day little ripple of dread – oh dear, one more afternoon in the sun and it’s back at work. So, retirement is not like that.

We had a lot of adjustments to make to transition from full-time work to receiving a pension and working as a freelancer. First, there was shutting down the rental condo in T.O. that was needed for this guy to work in Toronto during the week and be home in Ottawa for the weekends. We bought in Ottawa and rented in Toronto. So, retiring from the Toronto job meant packing up the little condo, giving notice, disconnecting cable and phone, and ending years of frequent train travel between points. That was a huge savings in our monthly budget – we went from two of everything to one of everything.

That helped, because even a very good pension only provided about half of what we had made at work. Getting less to live on was hugely offset by a drop in living costs; we were lucky in that regard to have had a very good work pension from the Healthcare of Ontario Pension Plan.

The boss retired from working at an Ottawa hospital the next year, but at time of writing is still working at a different hospital.

The Saskatchewan Pension Plan figures into both our retirement plans, and here’s how.

When we bought the house in Ottawa, we were engaged but not yet married, and that allowed us to take part in the Home Buyers’ Program. While looking around for a place to repay the money we had withdrawn for the house, we discovered an article by our friend Sheryl Smolkin, and loved the idea of a plan that resembled a registered retirement savings plan (RRSP) but had the additional extra feature of an annuity. The fact that it was not-for-profit and had far lower fees than a retail mutual fund was another sell. So, this guy was in.

Our own SPP account now represents more than twice what we took out for the house, and we add to it annually. Once we are fully retired – maybe in five years – we’ll start collecting it!

The boss soon found that working three or four days a week AND drawing a pension created a big of an income tax headache – the paying kind. So, we got her to sign up for SPP, and began contributing annually while also transferring money in from her various RRSPs. The tax-deductible SPP contributions fixed a tax problem and helped turn balances owing into refunds.

When she retires in February, part of her retirement earnings will be a monthly SPP annuity of about $500. That’s going to be a big help for her, as it will add to her retirement earnings and narrow the gap between what she made before she retired and what she is making after.

We have learned a few important things in this process.

1. When comparing your before-retirement income to your after-retirement income, be sure to do a net-to-net comparison, not gross to gross. Why? If your income goes down, so do your taxes – so the perceived “gap” may be less than you think. As well, you may not be paying for the Canada Pension Plan anymore, or other payroll deductions like union dues, parking, and so on. Net to net.
2. You’re likely only going to get a pension payment once per month. If you are used to getting paid monthly, you’ll be fine. It takes some getting used to if you were paid twice a month or every two weeks. Adjust your thinking accordingly.
3. Your stresses will change, but probably won’t disappear. Instead of worrying about meetings, promotions, career changes, traffic and so on you’ll find you are more focused on family, taking care of the old ones and helping the young ones. No meetings, sure, but still things to worry about.
4. You have time to learn new things. We’re line dancing, and this guy is golfing more and actually getting better on guitar. The line dancing has led us to meeting new people and we’re going on a trip to Nashville in the fall. So, make sure you are still doing something that allows you to have new social contacts in your life.

We conclude by noting that retirement almost seemed scary when we were working. No more structured workweek with meetings, assignments, annual reviews, and the like. Those things definitely required attention in the past, but now there are new and more interesting things to focus on. So, don’t be afraid of life after work.

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Those of us who don’t have a workplace pension – or want to augment it – are pretty familiar with what a registered retirement savings plan (RRSP) is. However, there can be tricky things to watch out for when investing your RRSP savings. Save with SPP had a look around the Interweb to highlight some RRSP pitfalls.

The folks at Sun Life identify five RRSP no-nos. First, they tell us, is the mistake of putting cash in your RRSP to meet the deadline, and then not putting it into an investment of some kind. Be sure you invest the money in something – “stocks, guaranteed investment certificates, mutual funds, bonds and more” so that your RRSP contributions grow. Your money grows tax-free until you take it out, so you need to have growth assets, the article says.

Another problem identified by Sun Life is raiding your RRSP cookie jar.

“Making RRSP withdrawals before retirement to, say, cover bills or make big purchases can have lasting consequences. For one, you’re giving up the years of tax-deferred growth your money would have generated inside your plan.” As well, the article continues, you’ll face a double tax hit – a withholding tax is charged when you take money out of an RRSP, and then the income from the withdrawal is added to your overall income at tax time. Double ouch.

Other things to watch out for, Sun Life advises, are overcontributing (be sure you know exactly what your limit is), spending your tax refund instead of re-investing it, and not being aware of RRSP/RRIF tax rules on death.

The Modern Advisor blog cautions folks against making their RRSP contributions “at the last minute.” If you spread your contributions out throughout the year, you will get more growth and income from them, the article advises.

Other tips include making sure your beneficiary selection is up to date, and knowing that contributions don’t have to be made in cash, but can be made “in kind,” such as by transferring stocks from a cash account to an RRSP account.

The RatesDotCa blog adds a few more.

On fees, RatesDotCa points out that many RRSP products, typically retail mutual funds, charge fairly hefty fees. “Canadians pay some of the highest fees in the world,” the article notes. “Over many years, these fees can add up, further reducing your retirement plan. Be sure to ask for a thorough explanation of the fees you can expect, and how they will affect your retirement plan,” the article advises.

Other ideas from RatesDotCa include not repaying your RRSP if you do borrow from it, not taking “full advantage” of any company pension plan (meaning, contribute as much as you can to it), and retiring too early (the article notes that both the Canada Pension Plan and Old Age Security pay out significantly more if you wait until age 70 to collect them.

Save with SPP can add a few more, gleaned from our own “welts of experience” over 45 years of RRSP investing.

Don’t frequently move your RRSP from one provider to another. This is called “churn,” and can result in hefty transfer fees and generally reduces the long-term growth needed for retirement-related investing.

If you borrow to make an RRSP contribution, do the math, and make sure the loan amount is affordable. Sometimes the bank or financial institution will want the money repaid within a year.

Be sure your investments are diversified, and include both equities and fixed income, plus maybe alternative investments like real estate or mortgage lending. Typically, if one sector is down, others may be up.

If you don’t want to think this hard as this about RRSP investments, consider the Saskatchewan Pension Plan. Contributions to SPP are treated exactly like RRSP contributions for tax purposes. You can’t run into tax trouble by raiding your SPP account because contributions are locked in until you reach retirement age. SPP offers a very diversified portfolio in its Balanced Fund, and fees charged by SPP are low, typically less than one per cent. Since its inception in 1986, SPP has averaged eight per cent returns annually – and although past results don’t guarantee future performance, it is a noteworthy track record. Check out SPP today!

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More had pension coverage in 2020, but six in 10 don’t: Statistics Canada

New research from Statistics Canada shows that 57,000 more Canadians had registered pension plans in 2020 than in 2019, reports Investment Executive.

However, the article notes, 2020 – the first year of the pandemic – saw fewer workers overall due to COVID-19. So while a greater percentage of workers had pensions, the overall worker pool actually shrunk that year, the article notes.

Let’s dig into the other findings.

“Nearly 6.6 million Canadians had a registered pension plan in 2020, up by 57,000 (0.9 per cent) from 2019,” Investment Executive reports, citing Stats Canada data.

“The increases came in Quebec (33,000), Ontario (25,200) and British Columbia (16,800), while fewer workers in Alberta (-23,400) and in Newfoundland and Labrador (-3,500) had pensions,” the article continues.

Defined benefit pensions – the type where the payout is pre-determined, and is typically a lifetime pension that may offer inflation protection – represented “the lion’s share of pensions in Canada,” the publication notes. 4.4 million Canadians were covered by this type of plan in 2020, the article adds.

Defined contribution pensions – basically capital accumulation plans, where savings are invested and whatever is in the kitty at retirement is turned into income – accounted for 18.4 per cent of all registered pension plan members. The Saskatchewan Pension (SPP) is this type of plan.

Overall, the article reports, “almost four in 10 (39.7 per cent) workers in Canada were covered by a registered pension plan in 2020, up from 37.1 per cent in 2019.”

“The increase in the coverage ratio was due to a decrease in labour force numbers, attributable to the pandemic, rather than an increase in the membership in the registered pension plans,” StatsCan stresses in the article.

Participation in workplace registered pension plans has been in decline generally this century, Investment Executive reports. “This level of coverage was last seen in 2001 (40.2 per cent), then trended downward before having a peak year in 2009 (39.4 per cent), after which point it resumed its downward trend.”

There are a couple of takeaways from this article. First, it suggests that over six in 10 workers in Canada weren’t covered by a registered pension plan in 2020. That’s going to be a problem as more folks without pension coverage at work converge on their retirement years.

On the positive side, these days in the sorta-kinda post-COVID world, employers are finding it harder to attract and retain employees. Many are improving the benefits they offer their teams, including adding or upgrading pension programs. Let’s hope this more positive trend continues.

If you don’t have any kind of pension arrangement at work, fear not. There’s a great do-it-yourself option out there through the Saskatchewan Pension Plan. Any Canadian with registered retirement savings plan (RRSP) room can sign up for SPP, and you can then contribute up to $7,000 annually to the plan. If you have an RRSP, you can move those funds to your SPP account – transfers of up to $10,000 a year are permitted. Your savings are professionally invested at a low cost in a pooled pension fund, and when it’s time to stop the whole work thing, you can arrange to receive some or all of your savings as a lifetime monthly pension via SPP’s annuity program.

Be sure to take a look at what SPP has to offer!

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